Our fight will go on

EQUITABLE Life members will continue to pursue the Government for compensation, despite attempts by Financial Secretary to the Treasury Ruth Kelly to quash their hopes.

Paul Braithwaite, of the Equitable Members Action Group (Emag), says that they will press ahead with efforts to get the Parliamentary Ombudsman to reinvestigate the case for compensation. Previously, she reported only on events since 1999, not on the crucial period before then.

Ms Kelly has attempted to turn Equitable into a political football by highlighting the so-called soft-touch regulation under the Conservative Government in the Eighties and Nineties. But her statements appear to be a tacit admission that government (albeit of a different political hue) was, in fact, at fault because it failed to regulate properly.

She emphasised on Monday that government ministers had encouraged light-touch regulation.

Equitable members are bound to question why Ms Kelly seems under the impression that the Labour Party and the Government are the same thing. They will argue that responsibility of government cannot be shirked just because a different political party is in charge.

Mr Braithwaite says: 'Light-touch regulation does not mean no regulation, which seems to have been the case with Equitable. Nowhere in the 1982 Insurance Act does the concept of light touch exist. Neither does it exist in the EU 3rd Life Directive of 1992.' The latter lays out the obligations of governments to protect policyholders.

A report commissioned by Emag shows it was perfectly possible to discover a £1.3bn black hole in Equitable as far back as 1990, based on published accounts - yet the regulators failed to spot this.

The 818-page Penrose Report is expected to add further fuel to the group's arguments, despite Ms Kelly's protests.

Mr Braithwaite says: 'Lord Penrose's conclusions were pre-determined by his remit. He could not recommend on compensation, so it is disingenuous of Ruth Kelly to then say that his report does not recommend compensation.'

Hopes for sizeable compensation from other sources appear minimal. Pursuing Equitable itself would be futile as members would just be suing themselves and robbing Peter to pay Paul.

But the report would appear to strengthen the case for pursuing former directors. Members will be particularly interested in the fact that its policy of adjusting bonuses to hold down the payouts of some members was hidden from its inception in 1982 until 1997.

Members will also be interested in the fact that Equitable had decided in August 1998 that it might need to reserve £1.5bn if it lost the court case on guaranteed annuity payments, while continuing to insist in public the cost would be £50m.

The fact that the society was promising to pay out more than it held in assets - at one stage as much as £4.5bn - for long periods in the Eighties and Nineties will also provide further fuel to those who feel they were misled and mis-sold.